TAX BRIEFING

Office of

the Chief Inspector of Taxes

Issue 31 - April 1998

Contents
Freedom of Information Act 1997

Compliance 1998 - Update

The EURO and Tax (Technical Tax Issues)

Euro/Year 2000 (Changeover Costs) / New Registration Form

8-9
10-11

Agency Workers / VAT Repayments

Removal/Relocation Expenses (Change in Procedures)

11

Seaside Resort Scheme / Foreign Earnings Deduction

13

Share Schemes (Restricted Shares)

14

Share Option Schemes (Residence)

16

Prompt Payment of Accounts Act 1997 (Treatment of Interest)

18

Revenue Job Assist

19

Schedule D Case I & II (Food and Subsistence Expenses)

23

Capital Allowances (Transitional Arrangements)

23

Charities

26

Charities (List of Natural Sciences)

27

Rental Income / Leasing

28-29

P35 / Residential Property Tax

29-30

International Issues

31

CAT / Probate Tax

32

Stamp Duty / Revenue News

34

Customer Service Unit,

Office of the Chief Inspector of
Taxes,
4th Floor
Setanta Centre,
Nassau Street,
Dublin 2

John Leamy
(01) 6716777 Extn. 4325
Rosemary ORahilly
(01) 6716777, Extn 4310
(01) 6710960

Editor:
Telephone No.
Assistant Editor:
Telephone No.
Fax No.

While every effort is made to

ensure that the information
given in this publication is
accurate, it is not a legal
document. Responsibility
cannot be accepted for any
liability incurred or loss
suffered as a consequence of
relying on any matter
published herein.

(FOI) ACT 1997 - Comes into operation

The Freedom of Information came into operation on 21 April 1998. The Act gives
members of the public new statutory rights, i.e.
A legal right to access information held by public bodies
A legal right of each person to have official information relating to himself or
herself amended, where it is incomplete, incorrect or misleading
A legal right to obtain reasons for decisions affecting himself or herself.

Routinely available information outside the FOI Act

Revenue currently makes much information routinely available to the public. Such
information continues to be available informally without the need to use the FOI Act.
For example, to the extent that tax offices have, to-date, provided information or
copies of documents relating to a taxpayer to the taxpayer or his or her agent, this
service will be unaffected by the FOI Act 1997.

Section 16 Information
In addition, in accordance with Section 16 of the FOI Act, Revenue rules, procedures,
practices, guidelines interpretations and precedents have been compiled in CD Rom
format and the CD will be available for purchase. The Section 16" compilation is
being made available on CD due to the volume of materials involved and the need to
provide the compilation, which will have to be updated regularly, at reasonable cost.

Access to information under the FOI Act.

The FOI Act is designed to allow access to information held by public bodies which
would NOT otherwise be available. Access to information under the Act is subject to
certain exemptions and involves specific procedures and time limits. A Guide to:
The structure of Revenue
How to obtain information under the FOI Act
is now available in all tax offices.
The following records come within the scope of the Act:
All records relating to personal information, i.e. relating to an individual, held by
Revenue, regardless of when created, where the request is made by the individual
concerned
All other records created from the commencement date, i.e. 21 April 1998
Any other records necessary for the understanding of a record created on or after
21 April 1998.
By virtue of the new statutory rights mentioned above, a person has a right to:
Access to records held by Revenue
Correction of personal information relating to himself or herself held by Revenue
where it is incomplete, incorrect or misleading
Access to reasons for decisions made by Revenue directly affecting himself or
herself.

Confidentiality
The Act asserts the right of members of the public to obtain access to official
information to the greatest extent possible consistent with the public interest and the
right to privacy of individuals.

The right to privacy is central to each persons dealings with public bodies. The
Freedom of Information Act 1997 contains numerous exemptions, providing strong
protection for the confidentiality of personal information, commercially sensitive
information and other information given in confidence to public bodies.
Confidentiality is, of course, fundamental to the relationship between taxpayers and
Revenue.

Exemptions
In addition to protecting personal, commercially sensitive and other information given
in confidence to Revenue, Part III of the FOI Act 1997 provides exemptions from
disclosure where, for example, disclosure could:
Prejudice the effectiveness of any tests, examinations, investigations, enquiries and
audits undertaken by Revenue
Prejudice enforcement of, compliance with or administration of taxes and duties
Disclose Revenues position in any negotiations.
Examples of exempt records include:
Case selection criteria for investigations and audits
Instructions in relation to the checking procedures for reliefs and repayments
Files in relation to ongoing audits or investigations.

Request for information under the FOI Act

Application must be made in writing. All requests for information should:
Contain the full name and address of requester, including phone/fax nos
Clearly specify or describe the information requested - (the more specific the
request the better will we be able to identify the record requested - please give as
much detail as possible)
State that the information is sought under the Freedom of Information Act.
If information is desired in a particular form i.e. photocopy, computer disc, etc. this
should also be mentioned in the application and this preference will be accommodated
where possible.
If a person making a Freedom of Information request has difficulty in identifying the
precise record required, the staff of the FOI Central Unit will be happy to assist in
preparing the request.
Revenue is obliged to:
Acknowledge the request within 2 weeks after the receipt
Notify the requester of the decision within 4 weeks of the receipt.
Should the information requested be held by another public body the request will be
directed to that public body within 2 weeks of its receipt and the requester will be
notified accordingly.
Section 28(2)(b) of the FOI Act 1997 provides for the disclosure of personal
information to a requester other than the person to whom the information relates, for
example a practitioner acting on behalf of a client, where the requester is so
authorised in writing by the person concerned.

Requests for information under the FOI Act should be addressed to the
Freedom of Information Central Unit,
5th Floor Wicklow House,
South Great Georges St.,
Dublin 2,
Ireland.
Telephone: 01 - 702 0850 Fax: 01 - 670 8418
E-Mail requests: A request may be initiated by E-Mail. In this instance an application
form will be sent to the requester for completion. The request will be processed when
the duly signed application form is received by Revenue. Note: When making E-Mail
requests please include full name and postal address.
E-Mail Address: info@foi.revenue.ie

Decisions
Subject to the provisions of the Act, Revenue may decide:
to grant or
refuse to grant the request or
to grant part of it
If the decision is that the request is to be granted wholly or in part, Revenue can
determine the form and manner in which the right of access will be exercised.
Whatever the decision, Revenue will give notice to the requester, in writing, of the
decision and determination. If the request is refused, whether wholly or in part,
Revenue are obliged to give reasons for the refusal. If the giving of access is deferred,
the reason for deferral and the period of deferral must be specified.

Review Procedures
The requester may seek an internal review of the initial decision which will be
carried out by an official at a higher level, than the decision maker, if:
The requester is dissatisfied with the initial response received i.e. refusal of
information, form of access, charges, etc. or
The requester has not received a reply within 4 weeks of his or her initial
application. This is deemed to be a refusal of the request and allows the requester
to proceed to internal review.
Requests for internal review should be submitted in writing to the FOI Central Unit at
the address shown above.
Such a request for internal review must be submitted within 4 weeks of notification of
the initial decision. Revenue must complete the review within 3 weeks. Internal
review must normally be completed before an appeal may be made to the Information
Commissioner.

The Information Commissioner

Generally, matters can only be appealed to the Information Commissioner after the
process of internal review has been completed.
With some exceptions, application for review by the Information Commissioner must
be made within 6 months of receiving notice of the decision or such further period as
is determined by the Information Commissioner to be reasonable in the
circumstances.

Appeals in writing may be made directly to the Information Commissioner at the

following address:
Office of the Information Commissioner,
18 Lower Leeson Street,
Dublin 2.
Telephone: 01-678 5222 Fax: 01-661 0570

Further Information in relation to FOI

Practitioners should refer to the Guide mentioned above for further detail in relation
to application procedures, internal review and appeals to the Information
Commissioner and for details of the charges involved.

COMPLIANCE INITIATIVES 1998 - An Update

In the February issue of Tax Briefing details of the 1998 Returns Compliance
programme were outlined. The purpose of this article is to give you an update on
progress and details of further plans for 1998.

Income Tax
After the low filing rate in 1995/96 there has been a noted improvement in the
Returns Compliance filing rate for 1996/97 - back to the rates achieved in prior years.
It should be noted also that in real terms this is an increase of c.11,000 actual returns
submitted.
Your assistance and co-operation in improving the timely filing rates this year is
much appreciated.
Due to technical difficulties beyond our control the letters to non-filing taxpayers did
not issue on 18 March as planned but they were all issued by 26 March 1998. Any
inconvenience caused is regretted. These letters have recently been followed up with
red reminder letters and Districts will commence the telephone/visit campaign in
May. Prosecutions are ongoing on the 1995/96 non-filers and will shortly include
1996/97 non-filers where appropriate.

Corporation Tax
The filing rate achieved for the 1996 returns is 72% i.e. an increase of 3% at the same
date last year. Thank you for your co-operation in achieving this improvement.
By now the telephone and visiting campaigns have commenced countrywide. Specific
attention is being focused on the persistent non-filers who have a number of returns
outstanding. Every effort is being made this year to bring these cases up to date. Your
assistance in identifying companies that have ceased, been dissolved etc. is vital for
this programme. Please contact your local tax office to update them on the current
status of these companies.
Your attention is also drawn to the initiatives recently announced by the Companies
Registration Office in relation to non-filers:
In a special issue of Iris Oifigil the Companies Office published a list of almost
5,000 companies that were struck off the register on 19 December 1997 and were
dissolved
It is now their intention over the coming months to strike off all companies that
have not filed their company returns, under Section 311 Companies Act 1963.
Further details will be outlined in the next issue of Tax Briefing.

THE EURO and TAX - Technical Tax Issues

In Issue 30 we indicated that technical tax issues relating to the euro would be
covered in Tax Briefing during 1998. Recently introduced legislative measures
relating to the single currency are contained in Section 47 and Schedule 2 Finance Act
1998. Therefore, it is appropriate at this time to address the technical issues of general
application which are covered in the 1998 Finance Act, namely:
Exchange gains and losses - [Paragraph 1 Schedule 2 Finance Act 1998]
Companies with non-IR functional currency -] [Paragraph 5 Schedule 2 Finance
Act 1998
Capital Gains Tax implications for foreign currency gains/losses arising otherwise
than in the course of a trade - [Paragraph 9 Schedule 2 Finance Act 1998]
Computational rules for Capital Gains Tax - [Paragraph 10 Schedule 2 Finance
Act 1998].
The tax treatment of the cost of converting to euro and indeed the Year 2000, is dealt
with on page 8.

Exchange gains and losses in trading companies

Section 79 Taxes Consolidation Act 1997 clarifies the tax treatment for trading
companies of exchange gains and losses derived from converting cash balances and
trade creditor balances. It also sets out the tax treatment of exchange gains and losses
arising from hedging contracts. Essentially the section provides that the tax treatment
of exchange gains and losses on these items should follow accountancy treatment
which is governed by SSAP 20. This provides that exchange gains and losses on these
items are brought into the profit and loss account regardless of whether they are
realised or unrealised. Exchange gains and losses of companies arising in a trading
context on these items are, therefore, brought into account for tax purposes. Exchange
gains and losses arising on non-trading assets (e.g. investments) are not governed by
Section 79 but are subject to normal capital gains tax rules. Where the investment is
in the form of cash in a bank please see the paragraph CGT Foreign Currency
Gains/Losses arising otherwise than in the course of a trade overleaf.
Paragraph 1 Schedule 2 Finance Act 1998 ensures that any gains or losses arising to
a trading company on1 January 1999 as a result of the conversion of a currency to the
euro will be treated for tax purposes in same way as gains or losses on foreign
currency transactions are treated under Section 79 Taxes Consolidation Act 1997.

Companies with non-IR functional currency

Section 402 Taxes Consolidation Act 1997 provides that companies which have a
functional currency other than Irish pounds can compute their capital allowances and
loss relief in that non-Irish currency. The Section sets out how to deal with a situation
where a company changes its functional currency and essentially ensures that total
allowances or losses to be given cannot exceed the amount of capital expenditure or
original losses, expressed in the new functional currency at the exchange rate
pertaining at the time the expenditure was incurred or the loss arose.
Some companies will have a balance of capital allowances or a balance of losses
forward in their non-Irish functional currency as at 1 January 1999. If that is a
currency of a euro-participating State, those balances will be converted to euros on 1
January, 1999 - as will the functional currency of the company. Paragraph 5 of
Schedule 2 Finance Act 1998 amends Section 402 Taxes Consolidation Act 1997 to

cater for the introduction of the euro. It provides that a change in functional currency
brought about solely by the introduction of the euro shall not be treated as a change in
functional currency for the purposes of Section 402. The balance of capital
allowances or losses should, therefore, be converted to euro by use of the conversion
rate between the euro and the original functional currency.
Where, on or after 1 January 1999, a company changes its functional currency from a
non-euro currency to the euro, capital expenditure incurred prior to 1 January 1999 or
allowances computed by reference to such capital expenditure is, under Paragraph 5,
to be expressed in terms of Irish pounds using the exchange rate pertaining at the date
the expenditure was incurred. These Irish pound amounts should then be converted to
euro using the fixed conversion rate between the Irish pound and the euro. The same
treatment applies in respect ofpre - 1 January 1999 losses.
Paragraph 5 ensures that the total capital allowances granted or to be granted
(or losses allowed or to be allowed) is equal to the amount of the capital
expenditure (or original loss) measured in Irish pounds at the date the
expenditure was incurred (or the loss arose).

Capital Gains Tax - Foreign Currency Gains/Losses arising

otherwise than in the course of a trade
Under Section 28 Taxes Consolidation Act 1997, capital gains tax is charged in
respect of chargeable gains accruing to a person on the disposal of assets. Under
Section 532 Taxes Consolidation Act 1997, any currency other than Irish currency is
an asset for the purposes of capital gains tax. Accordingly, a chargeable
gain/allowable loss can arise to a person buying and selling foreign currency
otherwise than in the course of trade. That gain/loss is computed by reference to the
corresponding Irish pound value of the purchase price and the sale proceeds.
Cash Holding

On the introduction of the euro, a holding in cash of a currency of another europarticipating State will become a holding of Irish currency. As no disposal will take
place at that time and the holding will now be in Irish currency, neither a chargeable
gain nor an allowable loss will arise in relation to this asset.
Bank Accounts

Where, however, the foreign currency is held in a bank account, the asset is the debt
denominated in foreign currency owed by the bank. On the disposal of this asset a
gain or loss can arise, again computed in terms of the Irish pound cost of acquiring the
asset and the Irish pound value of the disposal proceeds.
As at 1 January 1999, where an account has previously been in the currency of
another euro-participating State, it will become denominated in the same currency as
the currency of Ireland. In other words, the euro event will cause a bank account
denominated in the currency of another euro-participating State to be denominated in
Irish currency. Any gain or loss inherent in the asset (the debt) will crystallise at that
time. Paragraph 9 of Schedule 2 Finance Act 1998 sets out the tax treatment of a
bank account denominated in a foreign currency which on1 January 1999 becomes a
bank account denominated in euro, the then Irish currency. The exchange gains or
losses which would arise on the disposal of that account on 31 December 1998 are
deemed to arise on that day.
However, while a capital loss can be utilised immediately, any capital gain arising is
not liable to capital gains tax until the account is disposed of i.e. the funds are

withdrawn from the account. The part disposal rules apply where there is a partial
withdrawal of funds from the account.

Capital Gains Tax - computational rules

Paragraph 10 of Schedule 2 Finance Act 1998 addresses how the cost of an asset
acquired in a foreign currency is to be translated into the currency of the State for the
purposes of the computation of capital gains tax liability on its subsequent disposal.
Bentley v. Pike [1981 STC 360]
The present method of translation is based on the UK judicial decision of Bently -vPike [1981 STC 360]. In that case, it was held that where an asset is acquired using a
foreign currency, the allowable cost of the asset, (i.e. the cost to be used in the Irish
pound CGT computation on its disposal), is the IR equivalent at the date of
acquisition using the exchange rate at that time. Paragraph 10 ensures that this method
of translation will also apply where assets, which are disposed of after 1 January
1999, were acquired prior to 1 January 1999 in a currency of another participating
Member State.

Example
A person acquired an asset on1 May 1998 for 10,000 DM. Suppose the rate of
exchange at that date is 2.5 DM = IR1. The person disposes of that asset on or after1
January 1999 for 10,000 DM.At the date of disposal, both the Deutsch Mark and the
Irish Pound will be expressions of the euro. Suppose that 2.4 DM = IR1 = 1 euro* at
this date.
Following Bently -v- Pike and paragraph 10, the acquisition cost is 10,000 DM = IR
4,000 = 4,000 euro.
The disposal proceeds are 4,167 euro giving a gain of 167 euro.
*rates given are for illustration purposes only
Further information can be obtained by contacting our EMU Unit at:
Telephone: 01 - 679 2777
Ext. 4148/4817
Fax:
01 - 679 3352
E-mail:emuunit.dubcastle1@revenue.irlgov.ie

Rounding of Currency Amounts

A paper on the introduction of the euro and the rounding of currency amounts has
been issued by the European Commission. Copies are available from the European
Commission at:
Telephone: 01-662 5113

EURO / YEAR 2000 - Changeover Costs

Background
Revenue are receiving an increasing number of queries on how business costs
incurred to deal with the millennium bug and the introduction of the euro will be
treated for tax purposes. Most of the queries relate to the costs incurred on computer
software and hardware, on adapting point-of-sale equipment such as cash registers
and vending machines, and on training costs.

Revenue vs. Capital Expenditure

The starting point in dealing with this issue is to understand the basic difference
between costs of a revenue nature (which can generally be written off in full for tax
purposes in the year in which they are incurred), and costs of a capital nature for
equipment (which, in most cases, can be written off for tax purposes over 7 years). In
this regard - although there are some exceptions such as finance leases - the
capital/revenue classification for tax purposes will generally follow accountancy
principles. For accountancy purposes, costs are of a capital nature if they give rise to
an asset. Where costs are incurred in adapting existing assets, it is necessary to assess
whether the expenditure enhances the economic benefit of the asset (by extending its
service potential) or simply maintains its standard of performance, as originally
assessed. In the former case, the costs are of a capital nature and will qualify for
capital allowances; in the latter case, the costs can be written off for tax purposes as
incurred.

Software Costs
Software to deal with the year 2000 problem or the euro changeover can either be
bought in or developed/adapted in-house. In either case, the principles outlined above

will determine whether the costs will be of a capital or a revenue nature. As a general
rule, these costs are likely to be of a revenue nature, and therefore can be written off
for tax purposes as they are incurred.
They represent no more than a modification of existing assets to deal specifically with
the millennium bug and the euro. They will only be capital where the new software
acquired or the adaptation of existing software clearly results in an enhancement
beyond the original standard of performance and is not a mere maintenance of its
service potential. Any software expenditure of a capital nature can be written off for
tax purposes over 7 years in the same way as plant and machinery.

Hardware Costs
It may be that existing hardware (computers, cash registers, vending machines etc.)
may also need to be modified to cope with year 2000 and the euro. Again, the
capital/revenue distinction, as outlined above, must be made to determine the tax
consequences. As with software, the cost of modifications to maintain the
equipments service potential can be written off for tax purposes as incurred. The cost
of new hardware, or the cost of enhancing existing hardware beyond the assets
originally assessed standard of performance, can be written off for tax purposes over
7 years (i.e. 15% in years 1 to 6; and 10% in year 7).

Training etc.
The costs of training, and other costs such as informing customers, changing
stationery etc., will generally be of a revenue nature and can be written off for tax
purposes as incurred.
The changes in the 1998 Finance Act to facilitate the introduction of the euro are
explained separately on page 6 of this issue.

New Registration Form

Introduction
A new registration form, STR, (Small Traders Registration) will be introduced
shortly on a trial basis to provide a more customer-friendly form for the small sole
trader who wishes to register under any or all taxheads.

Who can use Form STR?

Form STR is aimed at an individual setting up in business who anticipates a turnover
of less than 100,000 per annum. This figure has been chosen more as a guide than as
an absolute cut-off point. Many customers will not be sure of their anticipated
turnover. However, in terms of simple commencement cases, it should generally be
possible to establish whether Form STR or Form TR 1 is the more suitable.
For example, in the case of a person who inherits or takes over a business, or an
individual who has been operating in the black economy but has now been obliged to
register, there should be sufficient information available about the size, scale and
nature of the operation to decide which form to use. Similarly, an individual
registering as a property developer is likely to have a substantial turnover where the
TR 1 would be the more appropriate form.
Although it depends on the scale and nature of the new business, Form STR should be
suitable for most basic sole trader registrations. It includes most of the requirements
of the TR 1. It is not suitable, however, for partnerships or trusts or for non-resident

10

individuals registering in relation to their Irish operations. More detailed information

about partners or trustees, for example, is required to register these cases and Form
TR 1 is designed accordingly.
Form TR 2 should continue to be used for registering companies.

11

INCOME TAX - Agency Workers

Taxation of individuals engaged through agencies
Background

There appears to be a perception that employment agency workers cannot be regarded

as employees for taxation purposes. Revenue do not regard the taxation of workers
engaged through agencies any differently to the taxation of workers engaged by any
other means. In fact, over the years many agency workers have always been regarded
as employees and PAYE/PRSI has been operated by the agencies, where the agency is
obliged to pay the person placed with a client. In contrast, PAYE/PRSI has been
operated by the client, where the client is obliged to make the payment to the person
placed with them.
Employee/Self-Employed

Where there is a doubt or a disagreement as to the status of an agency worker it is

necessary to examine the case by reference to the facts. The terms of the engagement
need to be examined to determine whether the agency worker is an employed person
or a self-employed person. Such examination should include the written terms, as well
as any oral, implied or inferred terms, (the written terms may not necessarily describe
the full relationship between the parties) and any other relevant information deemed
necessary to form an opinion as to the status of the worker.

Operation of PAYE/PRSI
Where the agency worker is regarded as an employed person, again the perception
appears to exist that there is difficulty in determining who the employer is for the
purpose of operating PAYE/PRSI. The PAYE system has always recognised the
uniqueness of a paying employer, who may not be an employer in the strict sense.
In fact, a pensioner can be an employee and the body paying the pension can be an
employer for the purpose of operating the PAYE system.
Chapter 4 Part 42 and the Income Tax (Employments) Regulations 1960 deal with the
administration of the PAYE system. Section 983 Taxes Consolidation Act 1997 gives
the following definitions:
employer
means any person paying any emoluments
employee
means any person in receipt of emoluments
emoluments
means anything assessable to income tax under Schedule E, and references to
payments of emoluments include references to payments on account of
emoluments.
Similar definitions are contained in Article 2 of the Income Tax (Employments)
Regulations 1960. There are also complementary definitions in Social Insurance,
Health and Employment & Training legislation for the purpose of collecting PRSI and
Levies through the PAYE system.
Consequently, Revenues view is that, in general, the person who is contractually
obliged to make the payment to an employed agency worker is the employer for
the purpose of collecting income tax and PRSI/Levies through the PAYE system.

12

This position is also consistent with Employment legislation, insofar as it relates to a

person employed through an employment agency.

13

VAT - Change in Repayment System

Change in system of VAT repayments
Practitioners will recall that Issue 30 of Tax Briefing provided details on the
changeover to the Direct Repayment System for all VAT repayments with effect
from1 July 1998. If traders have not already provided to the Collector-General details
of their bank/building society account to which repayments may be credited, they
should do so immediately.
Substantial delays will be experienced by traders awaiting repayments who have
not provided these details before 1 July 1998.
The details required are:
Name and Address of Trader
VAT Number
Name and Address of Bank/Building Society
Branch Sort Code
Bank/Building Society Account Number.
If practitioners or traders require any further information or assistance on this matter
they may contact:
Collector-Generals Office,
Sarsfield House,
Francis Street,
Limerick.
Telephone: 061 - 310310
(For Dublin Callers: 01 - 677 4211)
Fax:
061 - 401013.

REMOVAL/RELOCATION EXPENSES - Change in

Procedures
Change in procedure regarding Advance Revenue Clearance
Statement of Practice - SP IT/1/91 set out Revenues practice in regard to certain
removal/relocation expenses which were incurred by employees and reimbursed or
borne by their employer. The Statement outlined the expenses which could be
reimbursed without giving rise to a charge to tax.
One of the conditions governing the Statement was that prior approval had to be
obtained from the tax office before an employer could make qualifying payments free
of tax.
With effect from April 1998, specific prior approval by Revenue will not now be
required in respect of the removal/relocation expenses covered by this Practice.

14

Removal/Relocation Expenses
Introduction

It is an established principle under tax law that, where an employer pays or

reimburses the personal expenses for an employee, the amount paid or reimbursed is
to be treated as part of the employees remuneration and taxed accordingly. In
strictness this principle applies to payments made towards the costs incurred by an
employee in moving house to take up employment at a new location.
However, it has long been accepted by Revenue that the application of the principle to
tax certain removal/relocation expenses should be relaxed in genuine cases of
employees having to incur expenses to move to a new employment location and the
payment made by the employer towards the expenses results in no net overall benefit
to the employee.
Since 1991 Revenue have accepted that the practice may be applied to similar
payments made to or on behalf of an employee taking up employment with a new
employer.
Conditions which must be satisfied

The conditions which must be satisfied to allow the removal/relocation expenses

covered by this Practice to be paid free of tax are as follows:
(a) The reimbursement to the employee or payment directly by the employer must
be in respect of
removal/relocation expenses actually incurred
(b) The expenses must be reasonablein amount
(c) The payment of the expensesmust be properly controlled
(d) Moving house must be necessary in the circumstances.
Expenses covered by the Practice

In general, the expenses which can be reimbursed without giving rise to a charge to
tax would be those incurred directly as a result of the change of residence and would
include:
- Auctioneers and solicitors feesand stamp duty arising from moving house
- Removal of furniture and effects
- Storage charges
- Insurance of furniture andeffects in transit or in storage
- Cleaning stored furniture
- Travelling expenses on removal
- Temporary subsistence allowance while looking for accommodation at the new
location
(subject to a maximum of 10 nights at the appropriate subsistence rate
as per the schedule in Leaflet IT54 on Employees Subsistence Expenses). The
vouched rent of temporary accommodation for a period not exceeding three months
(this may not be paid concurrently with the temporary subsistence referred to
above).
With the exception of any temporary subsistence allowance, all payments must be
matched with receipted expenditure. The amount reimbursed or borne by the
employer may not exceed expenditure actually incurred.
Any reimbursement of the capital cost of acquiring or building a house or any
bridging loan interest or loans to finance such expenditure would be subject to tax.
In effect payment free of tax is restricted to the reimbursement of actual outgoings of
a revenue nature incurred at the time of the move.

15

Procedures being put on a self-assessment basis

In line with Revenues desire to ease the compliance burden on taxpayers, and
following similar moves regarding Employees Subsistence Expenses, the procedures
are being put on a self-assessment basis. With effect from April 1998, specific prior
approval by Revenue will not now be required in respect of the removal/relocation
expenses covered by this Practice. However, please see below regarding the keeping
of records and the auditing of these records.
Records to be kept - Audit of Records

All records relating to the removal/relocation expenses covered by these procedures

should be retained by the employer and may be examined in the event of an audit.
These records must be kept for six years unless an Inspector of Taxes indicates
otherwise.

FED - Definition
Foreign Earnings Deduction
Definition of qualifying day Section 823 TCA 1997
Revenue have been asked to clarify our interpretation of qualifying day for the
purposes of the foreign earnings deduction (FED). In particular, clarification has been
sought as to whether the day of departure is a qualifying day for the purposes of
the FED.
Revenues view is that qualifying days are generally those days (i.e.midnight to
midnight) where the individual is absent from the State for the purpose of performing
the duties of the office or employment and which are part of a continuous period of
absence of at least 14 days.
Day of Departure

Where an individual has left the State before midnight, that day of departure will
count as a qualifying day for the purposes of the relief where it is followed by a
continuous period of absence of at least 13 days. Outstanding claims for relief will be
settled on this basis.

RESORTS - Transitional Arrangements

Seaside Resort Scheme
Background

Section 355 Taxes Consolidation Act 1997 introduced a ring-fence on capital

allowances on holiday cottages or apartments. Section 355, subsection 5 provides for
certain transitional arrangements which deal with pipeline projects. The purpose of
this note is to clarify the terms of those transitional arrangements.
Subsection 5(a)(ii) applies to situations where, before 5 April 1996 an application
for planning permission for the construction of the holiday cottage or apartment was
received by a Planning Authority.
Planning applications

It has come to our attention that certain of the Planning Authorities, who have
responsibility for planning matters in areas designated under the Scheme, do not
differentiate between planning applications for private residences and those for
holiday homes.

16

Where the Planning Authority did not differentiate in this way Revenue are prepared
to accept that a pre-April 1996 planning application for dwellings relates to holiday
homes, provided that:
Documentary evidence (e.g. letter from Local Authority, copies of plans,
correspondence exchanged with architects etc.) is furnished which demonstrates
that the development in question was, at the outset, intended as a development of
holiday accommodation by the original planning permission applicant and was not
intended as a development of domestic dwellings,
and
The Local Authority has no objection from a planning point of view to the use of
the dwellings as holiday homes.
Those persons seeking to rely on subsection (b) of Section 355(5) must provide a
Planning Authority affidavit which specifically refers to holiday-type
accommodation.
With regard to subsection (5)(a)(i), where a binding contract was entered into before 5
April 1996, the subsequent planning application must be made on the basis that the
development is to be a development of holiday-type accommodation.
Queries

Any queries in relation to this article can be made to:

Direct Taxes Administration,
Incentives Branch,
Dublin Castle,
Dublin 2.
Telephone: 01 - 679 2777
Ext. 4018
Fax :
01 - 679 3314.

SHARE SCHEMES - Restricted Shares

Introduction
Shares acquired by employees on the exercise of options/rights and under other
employee share offer schemes may be subject to a restriction or clog where disposal is
prohibited for a number of years. The focus of this article is on such shares and is
based on current practice.
In it we outline Revenues:
View on the market value of such shares at the date of acquisition
Practice of abating the gain chargeable to income tax
View on the base cost for capital gains tax purposes.

Market value at date of acquisition

Two issues arise as to whether or not:
shares with a prohibition on sale, and
the same shares without a prohibition on sale
have the same market value for income tax purposes.
It is our view that a restriction on the sale of a share does not affect the market
value of such a share.

17

Abatement of gain chargeable to income tax

Revenue recognises that a restriction on the sale of shares could be said to reduce the
benefit acquired by the individual particularly, for example, where the individual
would like to dispose of the shares immediately but is prohibited. Revenue are
prepared, in cases where there is a genuine restriction, to allow the following %
abatements on the gain chargeable to income tax:
No. of years of
restriction on sale
Abatement
1 Year
10%
2 Years
20%
3 Years
30%
4 Years
40%
5 Years
50%
over 5 Years
55%
Example
Share offer granted/option
exercised (short option*)
1/3/98
Subscription/exercise price
4,000
Market value at 1/3/98
5,000
Restriction on sale of share
3 years
Income Tax - 1997/98
Market Value
5,000
Price paid
4,000
Gain
1,000
Abatement (30%)
300
Amount chargeable to income tax
700
* Special rules apply to long options/rights i.e. those capable of being exercised later
than 7 years from the date of grant. In such cases income tax is also chargeable at the
date on which the option/right is granted. The amount chargeable at that date is the
difference between the market value of the asset at the time the option/right is granted
and the consideration for which the asset may be acquired. Any tax so charged can be
deducted from any tax subsequently charged on the exercise, assignment or release of
the option/right.

Base cost for Capital Gains Tax purposes

Where an income tax abatement is given the base cost for Capital Gains Tax purposes
is as follows:
On the exercise of an option/right
Cost of the option/right, if any, and
Price paid for the shares on the exercise, and
Any amount charged to income tax* (Section 128(10) Taxes Consolidation Act
1997).
Under other employee share offers where the benefit is assessable
Price paid for the shares, and
Any amount charged to income tax*.
*This is the abated amount i.e. in the above example, 700. Indexation is available by
reference to the date expenditure is incurred. Where an amount charged to income tax
forms part of the cost that date is the date the tax is paid.

18

Alteration of terms
In cases where the original restriction on the sale of the shares is either removed or
amended, the income tax charge will be amended to reflect such change. A similar
adjustment will be made in cases where the shares are disposed of prior to the end of
the clog period.
Requirements
Companies wishing to avail of the abatement should contact their local Inspector of
Taxes. Any alteration to the terms of the grant/award, as mentioned in the previous
paragraph, should also be notified to the Inspector.
Details of:
All grants of options/rights, and
Allocations of shares under any options/rights
must be made to the Inspector not later than 30 days after the end of the tax year in
accordance with Section 128(11) Taxes Consolidation Act 1997 on Form SO 2.
Details of other share awards should be included in Form P11D in accordance with
Section 897 Taxes Consolidation Act 1997
Anti-avoidance
The prohibition on the disposal of shares must be for genuine commercial reasons and
not simply used for the purpose of tax avoidance.The above practice will be subject to
review and Revenue reserve the right to amend or withdraw it.

SHARE OPTION SCHEMES - Residence

Introduction

An individual is liable to income tax under Schedule E in respect of any gain arising
on the exercise, assignment or release of a share option obtained by that person on or
after 6 April 1986 as a director of a company or an employee in accordance with
Section 128 Taxes Consolidation Act 1997. The tax treatment of Irish individuals
enjoying rights under Irish share option schemes is relatively straightforward. The
introduction of a non-resident element does, however, complicate the position. The
purpose of this article is to explain the tax position for income tax and capital gains
tax when a non resident element is present.
Irish resident individuals - Income Tax

Where an individual realises a gain by the exercise, assignment or release of any share
option, obtained by that individual on or after 6 April 1986 as a director or an
employee of a company, and Section 71(3) Taxes Consolidation Act 1997 (remittance
basis) does not apply in charging to tax the profits or gains of that employment, the
individual is chargeable to tax under Schedule E for the year of assessment in which
the gain is realised. A charge arises even if the share option is granted before the
employment commences or after the employment ceases if it is granted by reason of
the individuals employment.
The amount of the gain chargeable is the difference between:
The market value of the share(s) at the time of acquisition, and
The aggregate amount or value of the consideration, if any, given for the share(s)
and for the grant of the share option.
Where a share option is capable of being exercised later than seven years after it is
obtained a charge to tax may arise at the date of grant of the share option.
The charge is calculated on the difference between:

19

 The market value of the share(s) at the date the share option is obtained, and
The consideration for which the share(s) may be obtained on the exercise of the
option. (If this consideration is variable the least amount of the consideration is
taken into account.)
In addition tax is charged when the share option is exercised. Any tax charged in
respect of the grant of the share option is allowed as a credit against the tax
chargeable on the subsequent exercise of the share option.
Irish resident and domiciled individuals - Capital Gains Tax

On a subsequent disposal of the shares the individual may be liable to capital gains
tax. The cost of the shares for capital gains tax purposes is:
The price paid for the shares on the exercise of the option, plus
The cost of the option, if any, plus
Any amount charged to income tax under Schedule E.
Indexation is available, subject to the normal rules, by reference to the date the
expenditure is incurred. In the case of any amount charged to income tax under
Schedule E that date may be taken to be the date the tax is paid.
Individuals leaving Ireland - Income Tax

The liability to tax is determined by the residence position of the individual at the
time the option is granted. If the individual is resident in Ireland at the time of the
grant of the share option he/she is liable to income tax under Section 128 Taxes
Consolidation Act 1997 at the date of grant of the option, if appropriate, and at the
date of exercise of the option even if he/she is no longer resident in the Ireland at that
time.
Individuals leaving Ireland - Capital Gains Tax

An individual who is neither resident nor ordinarily resident in Ireland at the date of
disposal of shares acquired on the exercise of an option is only liable to capital gains
tax if the shares disposed of constitute an asset for the purposes of Section 29(3)
Taxes Consolidation Act 1997.
Individuals coming to Ireland - Income Tax

An individual may acquire a share option before he/she arrives in this country and
while in this country exercise that option. No liability to tax arises under Section 128
Taxes Consolidation Act 1997 in respect of the exercise of such an option if there is
no connection between the Irish employment and the granting of the option and there
is no tax planning or avoidance involved.
Individuals coming to Ireland - Capital Gains Tax

An individual who is resident but not domiciled in Ireland at the date of disposal of
shares acquired on the exercise of an option may be liable to capital gains. However,
if the shares are registered outside Ireland and the United Kingdom the extent of the
charge is limited to the amounts remitted.
If the shares are registered in Ireland or the United Kingdom or if the individual is
domiciled in Ireland the capital gains tax liability is computed in the normal way. The
cost of the shares for capital gains tax purposes is:
The price paid for the shares on the exercise of the option, plus
The cost of the option, if any.
(Any gain chargeable to tax in another State on the exercise of the option does not
form part of the cost for capital gains tax purposes.)

20

PROMPT PAYMENT ACT - Treatment of Interest

Payments
Prompt Payment of Accounts Act 1997
General
The Prompt Payment of Accounts Act 1997 came into effect on2 January 1998 and
applies to goods and services supplied on or after that date.
The Act provides that certain purchasers who obtain goods or services from a supplier
must pay for those goods or services by a prescribed payment date. Where payment is
not made by this date, the purchaser must pay to the supplier an interest penalty in
addition to the amount due for the goods or services.
The annual rate of interest is 11.75%. This is calculated from the period beginning on
the day after the prescribed payment date and ending on the date when the payment is
made.
Purchasers liable for the interest penalty on late payment include Government
Departments, public bodies and their subsidiaries and contractors on public sector
contracts.

Tax treatment of interest paid under the Prompt Payment of

Accounts Act 1997
VAT

Interest is calculated on the VAT inclusive amount of the payment for goods or
services. VAT is not charged on the interest as the interest is not regarded as
consideration for the supply of goods or services.
Income Tax/Corporation Tax

The interest is regarded as a trade expense which is tax deductible in computing the
profits of the person making the payment (i.e. the purchaser).
The interest is taxable in the hands of the recipient (i.e. the supplier). Although
strictly chargeable under Case III of Schedule D, it may be included as a trade receipt
and accordingly assessed under Schedule D Case 1.
Tax Clearance Certificates

The Act does not require payment of an amount due to a supplier who has failed to
comply with a request to provide a tax clearance certificate. It extends the time limits
for payments where there are delays in furnishing tax clearance certificates.
Professional Services Withholding Tax (PSWT)

Where interest is paid on foot of payments which are payments for professional
services, within the meaning of Section 520 Taxes Consolidation Act 1997, PSWT
should not be deducted from the interest. When completing Forms F45 for issue to
specified persons (i.e. suppliers), accountable persons should exclude interest
amounts.

21

Withholding Tax on interest payments by companies and to

non-residents
Interest paid under the Prompt Payment of Accounts Act 1997 is yearly interest.
Accordingly, Section 246 Taxes Consolidation Act 1997 (deduction of tax at the
standard rate) applies where penalty interest is paid by:
A company* to a person whose usual place of abode is in the State
or
Any person to another person whose usual place of abode is outside the State.
Where Section 246 applies, the person by or through whom the payment is made must
deduct and remit to Revenue tax at the standard rate in force at the time the payment
is made.
In practice, Revenue will not require tax to be deducted under Section 246 from
payments of penalty interest under 100.
* Company in this context means any body corporate. A body corporate is a
succession or collection of persons having in the estimation of the law an existence
and rights and duties distinct from the individual persons who form it from time to
time [Murdoch, Dictionary of Irish Law]. Examples of bodies corporate are
companies registered under the Companies Acts, government departments and local
authorities.

REVENUE JOB ASSIST - New Tax Incentives

Introduction
Section 16 Finance Act 1998 provides relief to encourage the long-term unemployed
to take up employment and also gives an incentive to employers to employ such
individuals. These measures are known as Revenue Job Assist. Section 16 inserts
two additional Sections into the Taxes Consolidation Act 1997.
Benefit to employees

Section 472A Taxes Consolidation Act 1997 contains provisions to allow a deduction
to be made from the total income of a qualifying long term unemployed person in
each of 3 tax years after he or she takes up employment. An additional deduction is
also available in respect of each qualifying child.
Benefit to employers

Section 88A Taxes Consolidation Act 1997 contains provisions for a double deduction
in computing the profits of a trade or profession in respect of earnings, and the
employers PRSI contribution on those earnings, paid to a qualifying employee in the
first 36 months of a qualifying employment.

Employees
The allowance is available to an individual who takes up a qualifying employment,
who has been continuously unemployed for the immediate 12 months prior to taking
up the job and who has been in receipt of :
Unemployment Benefit
or
Unemployment Assistance
or
One-Parent Family Payment.

22

Time spent on:

Certain FS training courses (non-apprenticeship)
The Community Employment Scheme
The Job Initiative programme
The Workplace 5 week job experience programme
The Back to Education scheme administered by the Department of Social,
Community and Family Affairs
will also count as periods of unemployment for Revenue Job Assist provided the
individual was in receipt of Unemployment Assistance, Unemployment Benefit or
One-Parent Family Payment immediately before going on the course or scheme.
Qualifying employment

A qualifying employment is one where the emoluments from it are charged to tax
under Schedule E (generally PAYE) and which:
Starts on or after 6 April 1998
Is for a minimum period of 30 hours per week
Is capable of lasting at least 12 months.
Specifically excluded from the terms of the scheme are the following:
An employment from which the previous holder of the employment was unfairly
dismissed
An employment with an employer who has reduced the workforce by redundancy
in the 26 week period prior to employing a qualifying individual
An employment which is primarily commission based i.e. over 75% of the
earnings derive from commissions.
Special tax allowances

The special tax allowances are an extra personal tax allowance and a tax allowance
for each qualifying child. The amounts are as follows:
Extra Personal Tax Allowance
Year 1
3,000
Year 2
2,000
Year 3
1,000
Child Tax Allowance for each qualifying child
Year 1
1,000
Year 2
666
Year 3
334
The qualifying individual can claim the allowance for 3 years of assessment. The
claimant has the option of commencing with the year of assessment in which the
employment commences or the year of assessment following that in which the
employment commences.
This is to ensure that the benefits of the allowance are not diluted owing to an
employment commencing late in a tax year. Unused allowances from one tax year
cannot be carried forward to a later year.
The tax allowances can only be set against income from the new job which has been
taken up.
An individual can only have one 3 year period of claim in his or her lifetime.

23

Married Couples

The allowance is available to qualifying individuals irrespective of their marital

status. It is available to both spouses in married cases, provided each is a qualifying
individual for the purposes of the allowance.
Each spouse can have a different period of claim e.g. in a tax year where one spouse
is in the first year of claim and the other spouse is in the third year of claim, the
couple, assuming no qualifying children, are entitled to an allowance of 4,000 for
that tax year i.e. 3,000 for the first mentioned spouse and 1,000 for the other
spouse. The allowances are due to each spouse against his or her own emoluments
from the qualifying job. The allowance or any unused portion of the allowance is not
transferable between spouses. This position is similar to the current rules for granting
the PAYE Allowance.
Child allowance

The additional child allowance is due for each qualifying child resident with the
claimant for the whole or part of a year of assessment. The definition of a qualifying
child is the same definition as that used for One- Parent Family Allowance i.e. a child
who is:
Under 16 years of age
or
Over 16 years of age and receiving full time instruction at a university, college,
school etc.
or
Over 16 years of age and incapacitated either physically or mentally, having
become so either while undergoing full time instruction or while under 21 years of
age
and
a child of the claimant or if not a child of the claimant, is in the custody of and
maintained by the claimant.
The following points should be noted:
Unlike One-Parent Family Allowance, there is no restriction made if the child has
income in excess of 720
Only one allowance of 1,000, 666, or 334 can be granted in respect of each
qualifying child
The amount of the allowance to be granted in respect of each qualifying child
(1,000, 666 or 334) depends on which year of the 3 year period the claim is
made for e.g. a child born in Year 2 of the 3 year period will qualify for an addition
of 666 and not 1,000
Where two or more people are able to claim for the same qualifying child, there is
provision for splitting the allowance.
If the child is maintained by only one of the claimants, that individual will be
entitled to the child allowance
Where the child is maintained by one or more qualifying claimants, the allowance
can be split in the proportion that they maintain the child or in such manner as they
jointly notify in writing to the tax office.
Secondary Benefits

Under Revenue Job Assist claimants can retain their medical card for 3 years from
the date they return to work. They can also retain other secondary benefits such as

24

rent/mortgage subsidy, fuel allowance etc. for 3 years provided their income is less
than 250 weekly.
Changing jobs

An employee may change or re-commence employment once during this period and
keep the allowance, provided the second job is also a qualifying employment. The
allowance will be the allowance appropriate to the relevant year in the 3 year period.
Directors

The allowance is not available to a proprietary director or the spouse of such a

director. The position is therefore similar to the rules for granting the PAYE
Allowance. The allowance is available to qualifying children of proprietary directors
and children of the self-employed who are full-time employees in the businesses of
their parents, provided the relevant conditions are met.

Employers
Double deduction

An employer who takes on an employee under Revenue Job Assist is entitled to a

double deduction in computing the profits or gains of the trade or profession for:
Emoluments paid to a qualifying individual in respect of a qualifying employment
and
The employers PRSI contribution in respect of those emoluments
for the period of 36 months beginning on the date the qualifying employment
commenced. There is no option for the employer as to when the double deduction
starts.
There is no limit on the number of qualifying employees an employer can take on,
provided the jobs are qualifying jobs.
The double deduction is not due if the employer is benefiting or has benefited from
other employment schemes in respect of the new employment. However, provided tax
affairs are in order, an employer who takes on employees under the Scheme may also
qualify for the existing PRSI Exemption Scheme for the first two years of
employment. In this situation the double deduction for the first two years will refer
solely to the emoluments, the employers PRSI contribution for these two years being
NIL. Employers can get information on the PRSI Exemption Scheme from the
Department of Social, Community and Family Affairs at telephone no. 01-7043867.
The double wage deduction ceases when the qualifying employee ceases to be
employed. If he or she is replaced by a further qualifying employee and if the terms of
the scheme have not been breached, a separate double wage deduction for that second
individual is due for a 3 year period.
If he or she is replaced by a non-qualifying individual or if other conditions of the
scheme are not met a double wage deduction is not due. (e.g. if an employee is
dismissed in Year 3 in order to claim a double deduction for a further 3 years for a
different qualifying individual, the double deduction is not due.)
The allowance is not due if the qualifying individual or his or her employer, is
benefiting or has benefited from other employment schemes in respect of the new
employment. This will particularly rule out the allowance if:
The employee is in receipt of the Back to Work Allowance administered by the
Department of Social, Community and Family Affairs in respect of the new
employment

25

 The employer has benefited from the Jobstart programme administered by FS in

respect of the new employment.

26

Further Information
The following leaflets giving details of Revenue Job Assist are now available:
Leaflet IT 58
Information for Employees
Leaflet IT 59
Information for Employers
These leaflets are available from any tax office or from the Revenue Forms &
Leaflets Service at 01 - 878 0100.

SCHEDULE D - CASE I & II - Food and Subsistence

Expenses
Introduction
This article concerns deductions allowable in computing profits for tax purposes in
respect of food and subsistence expenses of self-employed individuals. The treatment
of employees (including directors) subsistence expenses is dealt with in Leaflet IT
54.

Cost of Meals
It is a long established principle that the cost of meals taken at the place of business
are not allowable expenses for tax purposes. In addition, expenses incurred on meals
consumed away from the place of business are, in general, not wholly and exclusively
laid out for the purposes of the trade or profession since everyone must eat in order to
live. Where such costs are not allowable they may not be apportioned to allow extra
costs incurred from the necessity of eating away from home or from the place of
business.
Costs of meals may be incurred wholly and exclusively for business purposes where a
business by its nature involves travelling (for example, in the case of self-employed
long distance lorry drivers) or where occasional business journeys outside the normal
pattern are made. A reasonable level of expenses incurred in these circumstances may
be deducted from business profits.
Where a business trip necessitates one or more nights away from home, reasonable
accommodation costs incurred while away from home may be deducted. The cost of
meals taken in conjunction with overnight accommodation may also be deducted.
Where self-employed long distance lorry drivers spend the night in their cabs rather
than taking overnight accommodation, the costs incurred on their meals may be
deducted.
It is important to note that only expenses actually incurred and for which receipts are
available may be claimed. Receipts must be retained for production in the course of a
Revenue audit of the business.

CAPITAL ALLOWANCES - Transitional Arrangements

Capital Allowances Restrictions
The Minister for Finance, in his budget speech on 3 December 1997, announced a
number of restrictions on the capital allowances on buildings that an individual
passive investor can claim against non-rental income. These restrictions are contained

27

in Sections 409A and 409B Taxes Consolidation Act 1997 [as inserted by Section 30
Finance Act 1998].
Certain transitional arrangements were also provided for pipeline projects where
specified conditions are met. This note deals with one aspect of these transitional
measures and its purpose is to provide clarification and guidance for persons seeking
to rely on its terms.
Section 409A(5)(b)(ii) which deals with industrial buildings and other premises and
Section 409B(4)(b)(ii) which deals with hotels, state that the restrictions will not
apply, where the following conditions exist:
An application for planning permission for the work on the building in question
has been received by a planning authority before 3 December 1997 or a detailed
plan had been prepared and detailed discussions had taken place with a planning
authority before that date
and
Expenditure on the building in question is incurred under an obligation entered
into by an individual before:
(I) 3 December 1997
or
(ii) 1 May 1998, pursuant to negotiations which were inprogress before 3
December
1997.
This condition pursuant to negotiations which were in progress before 3 December
1997" is explained in subsections 6(b) and 5(b) of Sections 409A and 409B,
respectively. These state that unless preliminarycommitments or agreements in
writing were entered into before budget day, then the condition above will not be
satisfied.

Revenues view on preliminary commitments or agreements

in writing
An individual seeking to come within the terms of this aspect of the transitional
measures and thereby claim unrestricted capital allowances must be able to
demonstrate, through pre-budget written evidence, that he/she was committed before
budget day in a preliminary manner to the project. This does not mean that a binding
contract or agreement had been entered into but is more in the nature of an agreement
reached or a commitment given, which subject to certain conditions, e.g. planning
permission being obtained, continuation of tax allowances etc. The agreement or
commitment is, however, something more substantive than a mere expression of
interest by an investor in a project.
Evidence

The type of written evidence which is acceptable to Revenue can include evidence of
payments of deposits, signed heads of agreement, exchanges of correspondence
between investor(s) and developer. Copies of minutes of meetings and conversations
may also be relevant, where other supporting documentary evidence is available. It is
imperative that any written evidence pre-date the budget. Revenue will not accept
letters, affidavits or statutory declarations which retrospectively verify events taking
place before budget day, as evidence on their own, but will, very exceptionally, use
them where there is other strong supporting evidence of a commitment or agreement.
These comments apply equally where there is more than one investor involved in the
project, written evidence must be provided in respect of each investor, together with
his/her respective interest in the project.
28

Agent

Revenue recognises that there are circumstances in which one individual (referred to
here as an agent) may give a commitment for an investment in a project on behalf of a
number of individuals. The agent may or may not be an investor in the project. The
requirements of the legislation, in Revenues view, are no different where these
circumstances exist to those required where no agent is involved. Evidence of a prebudget preliminary commitment or agreement in writing must be provided together
with an explanation of the circumstances whereby the agent was appointed.
Additionally, Revenue should be supplied with written evidence that each individual
investor who has been committed by the agent was a party to the project before the
commitment was given and it must also be possible to demonstrate his/her respective
interest in the project. Again, statements providing retrospective confirmations will
not be accepted on their own but will, very exceptionally, be used where there is other
strong supporting evidence of the identity of the investor.
It should be noted that Revenue cannot, in any circumstances, provide confirmation to
any investor whose identity was unknown at the time the commitment was given, on
the grounds that the transitional arrangements do not apply in such cases.
Claims for unrestricted Capital Allowances

While the sections require the claimant to prove that he/she comes within the terms of
the transitional provisions, the ordinary rules of self-assessment apply. Claims
forunrestricted capital allowances (i.e. cases which come within the transitional
provisions) may be made in the ordinary way. In case of doubt the expression of
doubt facility (Section 955(4) Taxes Consolidation Act 1997) should be used.
Alternatively, investors may seek confirmation that the transitional arrangements
apply to their investment. When doing so, they should provide all available
documentation from all sources (e.g. developer, solicitors, accountants, other
investors etc.) in order to allow Revenue to give careful consideration to the request.
Requests for confirmation should be sent to:
Declan Rigney,
Direct Taxes Administration Division,
Incentives Branch,
Dublin Castle,
Dublin 2.
Telephone: 01 - 702 4105
Fax:
01 - 679 3314.

Corporate Donations
TAX RELIEF FORCORPORATE DONATIONS

Section 61 Finance Act 1998 introduced a scheme of tax relief for companies who
make donations to eligible charities on or after 6 April 1998. An eligible charity
means any body in the State which is authorised in writing by Revenue. Copies of an
Explanatory Leaflet and Application Form for Authorisation can be obtained from:
Revenue Commissioners,
Charities Section,
Government Offices,
Nenagh,
Co. Tipperary.
Telephone: 067 - 33533
Ext. 3316

29

(or if calling from Dublin

01 - 677 4211)
or from your local tax office.

30

CHARITIES - Deeds of Covenant

Section 792(1) to (4) Taxes Consolidation Act 1997 make provision for tax effective
covenanted payments by individuals/companies to:
Universities and Colleges in the State to enable them to carry out research
Universities, Colleges and Schools in the State to assist them in the teaching of
the natural sciences.
Confusion has arisen in the past in relation to payment dates stated in such Deeds of
Covenant. The legislation states that a covenant must be payable for a period which
is or may be three years or longer. Thus, a Deed of Covenant taken out for a period
which is less than three years is ineffective for tax purposes. However, a Deed of
Covenant taken out for three years which stipulates that the first payment is to be
made on the date of execution of the covenant and the final payment is to made on the
last day of the final year, is effective as there is a period of three years between the
due dates for the first and last payments.
Example
If a Deed of Covenant is executed on 1 April 1995 and the first payment is made on
that date and the last payment is made on 31 March 1998 as stipulated in the Deed,
then the Deed is effective for tax purposes as there is a period of three years between
the first and the last payments.
In cases where the Deed of Covenant does not specify payment dates, the Deed of
Covenant has to be for a period of four years in order for Revenue to be satisfied
that there is at least three years between the first and the last payment.
Before any Deed of Covenant is entered into, covenantors should ensure that Revenue
have confirmed that the proposed scheme to carry out research/teach the natural
sciences qualifies for the tax reliefs available. Explanatory leaflets CHY 3,4,5 and 6
which contain sample deeds of covenant are available to covenantors and covenantees
from:
Revenue Commissioners,
Charities Section,
Government Offices,
Nenagh,
Co. Tipperary.
Telephone: 067 - 33533
Ext. 3310
(01 - 677 4211 if calling from Dublin)

Natural Sciences
UPDATED LIST OF THE NATURAL SCIENCE SUBJECTS

Section 792 Taxes Consolidation Act 1997 allows covenanting relief to any
university, college or school, being a university, college or school in the State for the
purpose of assisting such university, college or school to teach any one or more of the
natural sciences,.......
Charities Section in conjunction with the Department of Education and Science have
reviewed the list of natural sciences to take into account scientific developments since
the list was last updated in 1959. The updated list is printed on page 27 and copies can
be obtained from: Revenue Commissioners, Charities Section, Government Offices,
Nenagh, Co. Tipperary. Telephone: 067 - 33533

31

Ext. 3308/ 3310 (or if calling from Dublin 01 - 677 4211) or from your local tax
office.

LIST OF NATURAL SCIENCES

Analytical Biology
Analytical Chemistry
Analytical Science
Anatomy
Animal Breeding
Animal Physiology
Animal Science
Anthropology
Applied Physics
Aquaculture
Astronomy, (descriptive &
observational)
Astrophysics
Atomic and Molecular
Physics
Bacteriology (including
Mycology, Parasitology
and Virology)
Biochemistry (including
Industrial Biochemistry)
Biology
Biomechanics
Biomedical Science
Biophysics
Bioprocess Engineering
Bioprocessing
Biosensors
Biotechnology
Botany (including
Cytology, Plant
Pathology, Plant
Physiology, Taxonomy)
Cell & Tissue Centre
Cell Biology
Chemistry (including
Applied Chemistry,
Analytical, Inorganic
Organic, Physical,
Theoretical)
Classical Physics (Heat,
Optics, Electricity and
Magnetism - Fluid
dynamics etc.)
Clinical Medicine
Colloid Science

March 1998

Electronics
Embryology
Endocrinology
Engineering Science
Environmental Chemistry
Environmental Science
Environmental Studies/Waste
Equine Science
Experimental Physics
Fermentation (including
Fermentation Technology)
Food Science
Forensic Science
Forestry
Genetics (together with a
separate specialisation in
Human Genetics)
Geochemistry
Geology
Geophysics
Haematology
Histology
Human Genetics
Human Nutrition
Hydraulics
Hydrogeology
Hydrology
Immunology (including
Immunotechnology)
Information Technology
(including Informatics)
Inorganic Chemistry
Instrumentation (Physics)
Laser Science
Marine Science
Materials Science
Mathematical Physics
**Mathematics (including
Applied Mathematics)
Mechanics
Medical Laboratory Science
Medical Physics
Metallurgy
Meteorology
Microbiology (including

32

Nutrition
Obstetrics &
Gynaecology
Oceanography
Optics
Optoelectronics
Organic Chemistry
Organometallic
Chemistry
Paediatrics
Palaeontology
Parasitology
Particle
Physics
Pathology
Pharmacology
Pharmacy
Photochemistry
Photonics
Physical Chemistry
Physics
Physiology
Plant Genetics
Plasma Physics
Polymer Science
Polymer Chemistry
Treatment
Protein Engineering
Psychiatry
Psychology
Psychopharmacology
Quantum Physics
Radiation Physics
Radio astronomy
Radiography
Relativistic Physics
Science of Materials
Sensors (Physics)
Solid-state Physics
Spectroscopy
Sports Science
Statistics
Supramolecular
Chemistry
Theoretical Chemistry

Community Health
* Computer Science
Computational Chemistry
Computational Physics
Condensed Matter
Cosmology
Crop Breeding
Crop Science
Crystallography
Earth Science
Ecology
Ecophysiology

Industrial Microbiology)
Microbial Genetics
Modelling and Simulation
(Physics)
Molecular Biology
Molecular Genetics
Mycology
Nanotechnology
Nuclear and Particle Physics

33

Theoretical Physics
Toxicology
Veterinary Anatomy
Veterinary
Microbiology
Veterinary Pathology
Veterinary
Pharmacology
Veterinary Physiology
Virology
Wood Science
Zoology

* Computer Science
Computer Science is not a natural science subject in itself but it is added to the list as
it is regarded as assisting the teaching of the natural sciences.
** Mathematics covers
Pure (Arithmetic, algebra, geometry, trigonometry, calculus, etc.). Applied
(Mechanics, hydraulics, statistics etc.).
Mathematics is not strictly a science, and pure mathematics can be done without any
reference to the physical world. Nevertheless, as a high degree of mathematical
competence is essential for ability in practically all the natural sciences, mathematics
is usually regarded as a scientific subject from an educational point of view.

RENTAL INCOME - Allowable Expenses

Accountancy Fees
Issue 25 of Tax Briefing contained an article on rental income. The article covered
the tax treatment of accountancy fees incurred for the purposes of preparing a rent
account and management expenses incurred by property rental companies. We have
been asked to respond to the following questions which were asked in relation to the
article.
What is a rent account?
A set of accounts relating to a rental property or properties is commonly known as
a rent account.
Do accountancy fees include the actual cost of keeping records, maintaining
primary documents and preparing financial statements?
Yes. Receipts for accountancy fees which are claimed as a deduction against rental
income should
be held by the claimant.
Are fees in respect of company audits which are statutorily required to be
carried out treated as allowable?
Yes.
Are amounts in excess of the 10% and 15% limits in respect of directors
remuneration automatically disallowed?
No. The 10% and 15% limits are the limits below which remuneration will not be
queried by the Inspector. Amounts above these limits are not automatically
disallowed, although they may be
queried by the Inspector.

Pre-Letting Expenses
We have been asked whether pre- letting expenses are allowable. The question arises
following the introduction of Section 82 Taxes Consolidation Act 1997 which allows
a Case I/Case II deduction for certain pre-trading expenses. It has been suggested that,
since Case V deductions are computed by applying Case I principles, a corresponding
deduction should be allowed for pre letting expenses. The correct position is that no
deduction is allowable for pre-letting expenses. The technical explanation for this is
as follows:
The list of Case V expenses which are allowed as deductions in computing profit rent
is given in Section 97(2) Taxes Consolidation Act 1997. Section 97(3) Taxes
Consolidation Act 1997 applies Case I principles in computing the amount which is
allowable - it does not authorise any deductions. Only deductions specifically
authorised by Section 97(2) are allowable.
A deduction for pre-letting expenses is not specifically authorised by Section 97(2).

34

In addition, under Section 97(3), the amount of the deductions authorised under
Section 97(2) is the amount which would be deducted under Case I if the receipt of
rent were deemed to be a trade carried on during the currency of the lease or the
period during which the recipient of the rent was entitled to that rent. Accordingly,
Section 97(3) is triggered only where there is receipt of rent. Since, in a pre-letting
situation there is no receipt of rent, Section 97(3) does not invoke Section 82 Taxes
Consolidation Act 1997 for the purpose of authorising a deduction of pre-letting
expenses.
In considering amounts allowable under Section 97(2), regard should be had to
Section 105 which disallows interest payable and rent payable in respect of premises
before the premises in question is first occupied for the purposes of a trade or
undertaking or as a residence.

LEASING
Defeasance Payments
In many leasing transactions, the lessee enters into a defeasance agreement with a
third party where, in consideration for an upfront payment, the third party agrees to
make the rental payments under the lease. Revenue takes the view that the upfront
payment (the defeasance payment) is a Capital item.
Tax Treatment

Irrespective of the capital nature of the payment Revenue are prepared to allow the
defeasance payment to be deducted as an expense provided the amount is written off
over the life of the lease.

P35 - End-of-Year Return

Introduction
By now all registered employers will have received their P35 stationery. As usual the
deadline for submission of fully completed returns is 30 April. Returns should be sent
to the:
Employers (P35) Unit,
Government Offices,
Nenagh,
Co. Tipperary.
A P35 Helpline is available at 067 - 33533 or 677 4211(01 area) to deal with any
queries on completion of the forms.

Employers with computer payrolls

This year we are asking all employers with computer payrolls to submit their
employee details on diskette. The diskette is an attractive alternative to making paper
returns and the benefits include:
Less form filling
Tax-free allowance details can be supplied on diskette in subsequent years
Less time required to make the return.
Virtually all computer payroll systems can produce the P35 employee details on
diskette. It is simply just a matter of choosing the diskette option from the menu.

35

Detailed advice on the diskette system can be obtained by contacting John Grace at
the above telephone number.

36

Employers with manual payrolls

This year, in an effort to simplify matters further for manual payroll users, P35 forms
for manual completion no longer require pence. It will now suffice to enter pounds
only with no decimal points or pence. Practitioners also have the option of returning
employee details on a pre-formatted diskette provided by Revenue.
The system offers a user friendly method of inputting the employee details on the
diskette which is then returned to the Employers (P35) Unit. The benefits of this
system for practitioners are:
The P35 Declaration becomes the only form for manual completion
P60s can be printed from the diskette via a laser printer
Multiple employer returns can be made on one diskette
Basic validation of the data entered on the diskette is provided
The diskette contains help facilities to aid completion.
To avail of this package or for more details please contact Ciaran Hanley or Tom
McGrath at the P35 Helpline telephone number.

General
All Employers

Employers and practitioners can assist Revenue to achieve accurate and timely
processing of returns by:
Ensuring the forms and giro are only used for the employer to whom they are
issued. This is because each form is pre-coded with details unique to the specific
employer.
Returning the original forms only (not photocopies). The computer technology
used by Revenue to process returns is designed to operate with original forms.
Entering the correct RSI number for each employee on the P35 Listing
Fully completing each form.
Employers with no employees

A return indicating zero liability must be made for registered employers who had no
employees during the tax year.

Residential Property Tax

While Residential Property Tax was abolished with effect from 5 April 1997, a
Clearance Certificate procedure remains in place in relation to the sale of certain
residential properties to assist Revenue in collecting outstanding tax.
The value threshold relating to the Residential Property Tax Certificate of Clearance
procedure has been increased to 138,000 in accordance with the indexation
provisions in the legislation.
The new threshold, which relates exclusively to the Tax Clearance procedure, applies
to house sales contracts executed on or after 5 April 1998. From that date, where the
sale consideration for residential property exceeds 138,000, the vendor must provide
the purchaser with a certificate from Revenue indicating that all Residential Property
Tax due for years for which the tax was in operation has been paid.

37

INTERNATIONAL ISSUES - Withholding Tax Rates

Updated List of Withholding Tax Rates
COUNTRY
Australia
Austria
Belgium
Canada
Cyprus
Czech Rep.
Denmark
Estonia
Finland
France

YEAR
1984
1964
1973
1958
1952
1997
1994
*
1990
1966

Germany
Hungary
Italy
Israel
Japan
Korea
(Rep.)
Latvia
Lithuania
Luxembour
g
Netherlands
New
Zealand
Norway
Pakistan
Poland
Portugal
Russia
Spain

1959
1997
1967
1996
1974
1992

WITHHOLDING TAX RATES %

Dividend(s)
Interest
Royalties
15
10
10
0(b) / 10
0
0 /10(m)
0(b) / 15
15
0
0(c) / 15
15(j)
0(n)
0
0
0 / 5(o)
5(d) / 15
0
10
0(b)(d) / 15
0
0
5(d) / 15
10
5(p) / 10
0(b)(e) / 15
0
0
0(b) / 10(f) /
0
0(q)
15
0(b) / 15(g)
0
0
5(h) / 15
0
0
0(b) / 15
10
0
10
5(k) / 10
10
10(d) / 15
10
10
10(e) / 15
0
0

1999
*
1968

5(d) / 15
5(d) / 15
0(b) / 5(d) / 15

10
10
0

5(p) / 10
5(p) / 10
0

1965
1989

0(b)(d) / 15
15

0
10

0
10

1967
1968
1996
1995
1996
1995

0(d) / 10
15 / 0-35(i)
0(d) / 15
0(b) / 15
10
0(b)(d) / 15

0
No Limit
0(k) / 10
0(l) / 10
0
0

0
0
10
10
0
5(r) / 8(s) /
10
0

1998
0
0
South
Africa
1988
0(b) / 5(e) / 15
0
Sweden
1965
10(d) / 15
0
Switzerland
1976
0(b)(c) / 15
0
UK
1998
5(c) / 15
0
United
States
1967
0
0
Zambia
*Will not be in force before January 1999 at the earliest.

38

0
0
0
0
0

Notes
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)

Ireland does not charge withholding tax on dividends

Per EC Parent-Subsidiary Directive (25% holding)
Inter-corp. rate - 100% holding (see other conditions in treaty)
Inter-corp. rate - 25% holding
Inter-corp. rate - 10% holding
Inter-corp. rate - 50% holding
Subject to variation - see treaty
10% holding

39

(i)
For an Irish individual recipient (not engaged in trade or business in Pakistan
through a
permanent establishment) - the withholding tax rate is the Pakistani tax
rate (currently graduated scale to a top rate of 35%) which would have applied if
he/she were a Pakistani
resident liable to tax on total world income.
(j)
From Ireland - domestic standard rate applies
(k)
Certain credit sales and bank interest
(l)
Certain Government loans
(m)
If the recipient holds more than 50% of the payer company
(n)
Literary, dramatic, musical or artistic copyrights (other than for films or tv) otherwise
domestic rate applies
(o)
For films (not tv)
(p)
For use of industrial, scientific, or commercial equipment
(q)
Excluding films - domestic rate applies
(r)
Literary, dramatic, musical or artistic copyrights
(s)
Films, tapes and lease payments

DTAs - Update
Following a second and concluding round of negotiations with Romania a Double
Taxation Agreement was initialled in Dublin on 28 January 1998. It is proposed that
this agreement will be advanced to the stages of signature and ratification later this
year with the intention that it can have effect in 1999.

CAT/PROBATE TAX - Indexation Factors

A new Statement of Practice (SP-CAT 1/98) dealing with the index factors to be used
in calculating Capital Acquisitions Tax (CAT) and Probate Tax liabilities up to and
including 1998 is now available.
For CAT purposes, in respect of taxable gifts/inheritances taken in the following
years, the index factors to be used are:
1990
1.04
1991
1.076
1992
1.109
1993
1.145
1994 (prior to 11 April)
1.160
(To be applied to the threshold amount)
1994 (on or after 11 April)1.160
1995
1.188
1996
1.217
1997
1.237
1998
1.256
(To be applied to the class threshold)

40

The indexed class thresholds since 1996 are:

Class
A
B

Relationship
for example: son/
daughter
for example
parent/niece/
nephew/brother/sister/g
randchild
for example:
stranger/cousin

1996
182,55
0
24,340

12,170

Indexed Class Threshold

1997
1998
185,55
188,40
0
0
24,740
25,120

12,370

12,560

Exception: A parent qualifies for the Class A threshold where he/she takes an
immediate absolute inheritance on the death of a child.
In relation to Probate Tax, the index factors and the exemption thresholds are as
follows:
Year
Index Factor
Exemption Threshold ()
1993
10,000
1994
1.015
10,150
1995
1.039
10,390
1996
1.065
10,650
1997
1.082
10.820
1998
1.098
10,980
A copy of the new Statement of Practice is available from the Capital Taxes
Divisions Taxpayer Information Service, Fax No. 01 - 679 0049, or from the
Revenue Forms & Leaflets Service at telephone: 01 - 878 0100.

CAT/PROBATE TAX - Interest on Unpaid or Overpaid

Tax
Capital Acquisitions Tax
The rate of interest payable on unpaid tax has been reduced from 1.25% per month or
part of a month to 1% per month or part of a month (Section 41 Capital Acquisitions
Tax Act 1976). The rate of interest payable on refunds of tax has been reduced from
0.6% per month or part of a month to 0.5% per month or part of a month (Section
46(1) Capital Acquisitions Tax Act 1976). These revised rates apply in respect of
interest chargeable or payable for any month or part of a month commencing on or
after the date of the passing of the Finance Act 1998. Details of the provisions are
contained in Section 133 Finance Act 1998.

41

Probate Tax
The rate of interest on overdue Probate Tax has been reduced from 1.25% per month
or part of a month to 1% per month or part of a month. The discount for Probate Tax
which is paid within nine months of the date of death is also reduced from 1.25% per
month or part of a month to 1% per month or part of a month. The amended rates
apply where the period in respect of which interest is to be charged, or a discount falls
to be made, commences on or after the date of the passing of the Finance Act 1998.
Details of the provisions are contained in Section 127 Finance Act 1998.

STAMP DUTY
Interest on unpaid or overpaid duty
Interest chargeable under the provisions of Section 15(1) Stamp Act 1891 for any
period commencing on or after the date of the passing of the Finance Act 1998 will be
charged at the reduced rate of 1% per month or part of a month. Interest charges
incurred for any period prior to this date will continue to be charged at the rate of
1.25% per month or part of a month. The interest rates chargeable under other
sections of the stamp duty code have also been amended.
In addition, the interest rates payable on refunds of duty have been amended. The rate
of interest on refunds of Companies Capital Duty has been reduced from 9% per
annum to 6% per annum, while the rate of interest on stamp duty refunds made under
the provisions of Section 112 Finance Act 1990 has been reduced from 1% per month
or part of a month to 0.5% per month or part of a month.
Full details of these amendments can be found in Section 124 Finance Act 1998.

REVENUE NEWS - Update

Change of Address
Wexford tax district is now located at:
Government Buildings,
Anne Street,
Wexford.
Telephone: 053 - 45555
Fax: 053 - 47207

New Information Leaflets

Leaflet IT 57 Relief for Investment in Films - March 1998
Leaflet IT 58 Revenue Job Assist (Information for Employees)
Leaflet IT 59 Revenue Job Assist (Information for Employers)
Copies of these leaflets can be obtained from the Revenue Forms & Leaflets Service
at 01 - 878 0100 or from any tax office.

Form CT1
Form CT1 has been re-designed to cater for the recent changes in corporation tax
rates. The VSA sections have been omitted from the revised form and a separate
computation sheet, Form VSA(CT), will be available shortly for those wishing to use
it. Practitioners own computation sheets are, of course, equally acceptable.

42

Issue of Returns for 1997/98

The number of Returns issued for 1997/98 is as follows:
Form 12
Form 12 Directors
Form 11
Form 11 Short
Form BP1
Form AG12
Form 1
Form 1 Firms
Form 46G
Form 54 Claims
Form 54D

84,509
54,108
209,891
42,963
7,761
22,999
2,854
14,546
27,822
21,328
18,421

Conversion Rates
Sterling

The average rate of exchange for Sterling for the year ended 5 April 1998 is:
Stg1 = IR1.1092
The daily and monthly rates for 1997/98 are given in the chart on page 36
Other Currencies

The chart on page 37 sets out conversion rates for a range of currencies supplied by
the Central Bank.

Lloyds Conversion Rates

Year ended 31 December 1993 et seq.:

For members of Lloyds resident in the Republic of Ireland, in respect of accounts

closed in the calendar year 1993 and later, the conversion of sterling to IRs should
be calculated by reference to the sterling commercial selling rate on the last market
day of the calendar year in which the account is closed. Rate for year ended 31
December:
1993 Stg 1 =
IR 1.0317
1994 Stg 1 =
IR 0.9995
1995 Stg 1 =
IR 0.9687
1996 Stg 1 =
IR 0.9926
1997 Stg 1 =
IR 1.1416

43

Sterling (Commercial Selling) Rate 1997/98Punt Equivalent of Sterling Pound

Calculated by reference to the daily rate given to persons cashing sterling cheques valued between 500stg and 2500stg as supplied by AIB Plc.
DATE

6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
1
2

APR 6 - MAY 6 MAY 5

AVERAGE
NONE 1.0747
1.0325 1.0770
1.0395 1.0712
1.0390 1.0644
1.0395 NONE
1.0384 NONE
NONE 1.0537
NONE 1.0593
1.0411 1.0660
1.0433 1.0633
1.0449 1.0610
1.0444 NONE
1.0460 NONE
NONE 1.0683
NONE 1.0694
1.0406 1.0700
1.0406 1.0747
1.0428 1.0655
1.0406 NONE
1.0428 NONE
NONE 1.0644
NONE 1.0740
1.0428 1.0667
1.0438 1.0724
1.0616 1.0724
NONE NONE
1.0929 NONE
1.0718 NONE

JUNE 6- JULY 6- AUG 6 - SEPT 6 - OCT 6 - NOV 6 - DEC 6 - JAN 6 - FEB 6 - MAR 6 - YEARLY
JUNE 5 JULY 5 AUG 5 SEPT 5 OCT 5 NOV 5 DEC 5 JAN 5
FEB 5
MAR 5 APR 5
1.0946
NONE
NONE
1.0793
1.0672
1.056
1.0793
1.0504
NONE
NONE
1.0537
1.0554
1.0588
1.0644
1.0638
NONE
NONE
1.0712
1.0753
1.0730
1.0947
1.0747
NONE
NONE
1.0747
1.0989
1.0707
1.0811

NONE
1.1105
1.0834
1.0817
1.0823
1.0811
NONE
NONE
1.0893
1.0911
1.0881
1.0881
1.0893
NONE
NONE
1.0911
1.0977
1.1062
1.1031
1.1130
NONE
NONE
1.1038
1.1001
1.1013
1.0941
1.1013
NONE

1.1013
1.0911
1.0823
NONE
NONE
1.0747
1.0782
1.0747
1.0684
1.0724
NONE
NONE
1.0747
1.0707
1.0764
1.0782
1.0655
NONE
NONE
1.0678
1.0701
1.0582
1.0689
1.0633
NONE
NONE
1.0650
1.0604

NONE
NONE
1.0488
1.0466
1.0504
1.0449
1.0504
NONE
NONE
1.0510
1.0433
1.0554
1.0532
1.0644
NONE
NONE
1.0689
1.0852
1.0852
1.0805
1.0811
NONE
NONE
1.0864
1.0893
NONE
1.0947
1.0959

1.0929
1.0923
1.0959
1.0959
1.0971
NONE
NONE
1.0965
1.0983
1.0870
1.0870
1.0881
NONE
NONE
1.0965
1.0947
1.1007
1.0941
1.1001
NONE
NONE
NONE
1.0983
1.1031
1.1013
1.0989
NONE
NONE
44

1.0983
1.1025
NONE
NONE
1.0965
1.1019
1.1080
1.1105
1.1074
NONE
NONE
1.1099
1.1099
1.1080
1.1093
1.1136
NONE
NONE
1.1148
1.1136
1.1105
1.1123
1.1173
NONE
NONE
NONE
1.1236
1.1325

NONE
NONE
1.1217
1.1192
1.1230
1.1204
1.1173
NONE
NONE
1.108
1.1117
1.1117
1.1186
1.1280
NONE
NONE
1.1299
1.1293
1.1325
NONE
NONE
NONE
NONE
NONE
1.1429
1.1416
NONE
1.1416

1.1635
1.1635
1.1716
1.1990
NONE
NONE
1.1635
1.1758
1.1696
1.1730
1.1703
NONE
NONE
1.173
1.1751
1.1730
1.1648
1.1682
NONE
NONE
1.1648
1.1648
1.1621
1.1792
1.1792
NONE
NONE
1.1806

1.1628
NONE
NONE
1.1671
1.1641
1.1581
1.1675
1.1751
NONE
NONE
1.1813
1.1779
1.1841
1.1855
1.1820
NONE
NONE
1.1827
1.1765
1.1758
1.1855
1.1898
NONE
NONE
NONE
NONE
NONE
1.1933

1.1905
NONE
NONE
1.1926
1.1905
1.1933
1.1983
1.1998
NONE
NONE
1.1933
NONE
1.1969
1.2012
1.1969
NONE
NONE
1.2012
1.2048
1.2019
1.2026
1.2077
NONE
NONE
1.2114
1.2180
1.2107
1.2165

3
4
5
mtly avg

NONE
NONE
NONE
1.0464

1.0764
1.0875
1.0793
1.0696

1.0764
NONE
NONE
1.0721

NONE
NONE
1.1013
1.0951

1.0610
1.0526
1.0515
1.0708

1.0995
NONE
NONE
1.06876

1.1056
1.1031
1.1025
1.0968

45

1.1287
1.1274
1.1179
1.1125

NONE
NONE
1.1442
1.1260

1.1716
1.1744
1.1716
1.1718

1.1884
1.1891
1.1891
1.1788

1.2114
NONE
NONE
1.2020

1.1092

CONVERSION RATES - Foreign Currencies

Fiscal Year Average Market
Mid-Closing Exchange Rates v. Irish Pound
1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98
U S Dollar
1.5917
1.6771
1.441
1.5171
1.6048
1.6051
1.4611
Sterling
0.9179
0.996
0.9576
0.9746
1.0263
1.0116
0.8902
Deutschmark
2.6712
2.6122
2.4134
2.3623
2.2973
2.4923
2.5926
French Franc
9.0844
8.8474
8.2717
8.1325
7.9607
8.438
8.7124
Dutch Guilder
3.0089
2.9406
2.7091
2.6488
2.5724
2.7955
2.9199
Belgian Franc
54.99
53.79
50.46
48.64
47.23
51.34
53.50
Danish Krone
10.3231 10.0743 9.4937
9.2952
8.9241
9.5694
9.8743
Italian Lira
1998.93 2189.19 2311.51 2427.69 2583.78 2500.8
2544.55
Greek Drachma
299.25
331.94
340.77
361.74
374.84
393.84
411.41
Spanish Peseta
167.69
176.76
192.91
198.86
197.23
209.95
219.12
Portuguese Escudo 231.36
229.06
241.01
243.05
240.24
253.21
263.41
Japanese Yen
211.65
208.84
155.22
150.44
155.19
180.92
179.24
Swiss Franc
2.3407
2.3647
2.1086
1.9884
1.8776
2.0844
2.1348
Swedish Krona
9.6875
10.3668 11.3854 11.4479 11.2042 11.0045 11.3911
Norwegian Krone 10.4533 10.601
10.3968 10.33
10.1331 10.4499 10.6821
Finnish Markka
6.7385
8.0209
8.1706
7.5123
6.9929
7.5312
7.7961
Austrian Schilling 18.8
18.39
16.98
16.62
16.16
17.54
18.24
Hong Kong Dollar 12.3501 12.9714 11.1441 11.7282 12.4129 12.4186 11.3127
Canadian Dollar
1.8325
2.0612
1.8884
2.0967
2.1864
2.1847
2.0481
Australian Dollar 2.061
2.3364
2.1075
2.045
2.159
2.0358
2.0461
ECU
1.3038
1.3105
1.25
1.2419
1.2439
1.3048
1.3175
E.E.R. Index
67.27
69.69
65.12
65.65
67.4
69.01
65.59
This is a fiscal year rate as supplied by the Central Bank. The rates offered commercially to private
customers by the associated banks may differ (see table on page 25 showing the sterling commercial
selling rate calculated by reference to the daily rate given to persons cashing sterling cheques valued
between 500stg and 2500stg).
On making a return of foreign income to the Inspector of Taxes the taxpayer may use the rate of
exchange obtained by him/her in respect of the foreign currency, provided that method of conversion
is used consistently.

46

CAPITAL GAINS TAX - Multipliers

Capital Gains Tax
Multiplier for Disposal in year ended 5 April

Year
Expenditure
Incurred
1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

1974/75
1975/76
1976/77
1977/78

5.009
4.046
3.485
2.988

5.221
4.217
3.633
3.114

5.355
4.326
3.726
3.194

5.552
4.484
3.863
3.312

5.656
4.568
3.935
3.373

5.754
4.647
4.003
3.432

5.899
4.764
4.104
3.518

6.017
4.860
4.187
3.589

6.112
4.936
4.253
3.646

6.215
5.020
4.325
3.707

1978/79
1979/80
1980/81
1981/82
1982/83
1983/84
1984/85
1985/86
1986/87
1987/88
1988/89
1989/90
1990/91
1991/92
1992/93
1993/94
1994/95
1995/96
1996/97
1997/98

2.760
2.490
2.156
1.782
1.499
1.333
1.210
1.140
1.090
1.054
1.034
-

2.877
2.596
2.247
1.857
1.563
1.390
1.261
1.188
1.136
1.098
1.077
1.043
-

2.951
2.663
2.305
1.905
1.603
1.425
1.294
1.218
1.165
1.126
1.105
1.070
1.026
-

3.059
2.760
2.390
1.975
1.662
1.478
1.341
1.263
1.208
1.168
1.146
1.109
1.064
1.037
-

3.117
2.812
2.434
2.012
1.693
1.505
1.366
1.287
1.230
1.190
1.167
1.130
1.084
1.056
1.019
-

3.171
2.861
2.477
2.047
1.722
1.531
1.390
1.309
1.252
1.210
1.187
1.149
1.102
1.075
1.037
1.018
-

3.250
2.933
2.539
2.099
1.765
1.570
1.425
1.342
1.283
1.241
1.217
1.178
1.130
1.102
1.063
1.043
1.026
-

3.316
2.992
2.590
2.141
1.801
1.601
1.454
1.369
1.309
1.266
1.242
1.202
1.153
1.124
1.084
1.064
1.046
1.021
-

3.368
3.039
2.631
2.174
1.829
1.627
1.477
1.390
1.330
1.285
1.261
1.221
1.171
1.142
1.101
1.081
1.063
1.037
1.016
-

3.425
3.090
2.675
2.211
1.860
1.654
1.502
1.414
1.352
1.307
1.282
1.241
1.191
1.161
1.120
1.099
1.081
1.054
1.033
1.017

NOTE :
The year 1974/75 means the year commencing on 6 April 1974 and ending on 5 April
1975.
Other years are described similarly.
No indexation is available for expenditure made within 12 months prior to the date of disposal.

48